How to open NPS Account Online in 30 Minutes?

NPS Account is a social security scheme introduced by the Govt aimed at providing a steady stream of income post retirement. This helps in retirement planning and is a very good scheme for every person to be investing in.

Budget 2015 has also allowed for an additional deduction under Section 80CCD for Investment in NPS Account. This deduction would be allowed for investments made from Financial Year 2015-16 onwards.

With an additional deduction being provided for Investment in NPS Account, it has now become even more lucrative for everyone to be investing in NPS Account. We advise everyone to invest in NPS Account as it not helps in Retirement Planning but also helps in tax saving.

If you are in the 30% Income Tax Bracket and invest Rs. 50,000 in the NPS Account – you can save additional Rs. 15,000 in taxes. This saving is over and above the tax saving done under Section 80C.

How to open a NPS Account?

PFRDA is the regulatory authority for the NPS Account and has authorised several banks to open NPS Accounts. These accounts can be opened through the bank branch as well as through the online mode.

Any person who is in the age group of 18-60 years can open a NPS Account. After the age of 60 years, you cannot invest in the NPS Account as after the age of 60 years – your NPS Account starts paying you the Pension. A person has the option of both conversion into annuity pension to be paid at regular intervals and the option of withdrawing the amount in lump-sum.

Recommended Read: Withdrawl from NPS Account and Tax Implications

There are 2 types of NPS Accounts – Tier 1 and Tier 2 Account. Tax Deduction under Section 80CCD is only allowed for Investment in Tier 1 Account.

The minimum annual contribution to be made to the NPS Account is Rs. 6000 per annum. This can be made either lump-sum or in instalments of atleast Rs. 500 each.

How to open NPS Account by visiting Bank Branch?

Specified Branches of several banks have been authorised by the PFRDA to open NPS Account. Such bank branches are referred to as Point of Presence Centres (PoP Centres) which are authorised to open NPS Account.

It takes a significant amount of time for the banks to open a NPS Account if the application is made at their bank branch. Generation of the PRAN No. for applications made at the bank branch takes time as a result of which the whole process may in some cases take a month.

The reduce the time taken in opening a NPS Account if the application is made at a bank branch, the PFRDA has also allowed the NPS Account to be opened online. The time taken for processing applications which are made online is significantly lesser than the time taken for opening NPS Account by visiting the Bank Branch.

Procedure to open NPS Account online in 30 minutes

If you have an online demat account and your banker is authorised to open NPS Account, you can make an application for NPS Account online as well through your banks demat banking website.

Apart from opening NPS Account through online demat accounts, NPS Account can also be opened through the govt website i.e.

A NPS Account on the above mentioned link can be opened irrespective of whether a person has a Demat Account or not. The following steps are required to be followed for opening NPS Account online:-

Step 1:

Furnish your Aadhaar Card No. on the above mentioned link. A one time password (OTP) would be sent to your registered mobile no. which is linked with your aadhaar card no.

If you don’t have a Aadhaar Card No. or your mobile no. is not registered with your Aadhaar card no., you won’t be able to receive the OTP. In such cases, you can register on the website using your PAN Card No.

In case the registration is done through PAN Card, the activation of the National Pension Scheme Account is subject to KYC Verification by the Banks.

Step 2:

In case the registration is done through the Aadhar Card No., you would be required to mention the OTP received. On furnishing the OTP, the portal will automatically retrieve your residential information and photograph linked with your Aadhaar card. You would also be given the option to change and upload a new photo or retain the photo fetched from the Aadhaar Card No.

In case the registration is done through the PAN Card, you would be required to submit the docs to the Banker conducting the KYC.

Step 3:

You would now be required to mention all other relevant details in the online form so generated. Apart from mentioning all relevant details, you would also be required to upload a scanned copy of your signature.

Step 4:

Make the payment online for deposit in NPS Account. The payment can be done either via NetBanking or Debit Card or Credit Card. A 1% charge would be levied if the payment is made through a Debit Card or a Credit Card.

If the Registration is done through the Aadhaar Card or through the Demat Account of the Bank Website, the whole process will only take 30 minutes. In all other cases, the KYC Compliance would be required to be done which may take a few weeks.

Asset Allocation of NPS Account

The amount invested in the NPS Account is in-turn invested in several financial instruments. This amount can be invested in any of the following 3 category of instruments:-

Index Based Stocks

Bonds issued by State Govt., PSU’s and Private Firms

Bonds issued by Central Govt

You would be required to specify how much funds you intent to invest in which category of financial instrument. If the asset allocation is not specified, the investor’s age decides the equity exposure. Upto 35 years, the asset allocation in equities is 50%. This is reduced by every 2% after the investor turns 35, till it becomes 10% by the age of 55.

You would be given the option to choose the fund manager whom you would like to manage the funds on your behalf. You would be required to select any 1 of the following fund managers:-

LIC Pension Fund

SBI Pension Fund

Reliance Capital Pension Fund

UTI Retirement Solutions

DSP BlackRock Pension Fund Managers

HDFC Pension Management Company

ICICI Prudential Pension Funds Management Company

Kotak Mahindra Pension Fund

Things to be done after opening of NPS Account

After the whole process for opening of NPS Account online has been completed, a Permanent Retirement Account No. (PRAN) would be allotted to you.

You need to take a printout of the form, paste your photograph & sign the form in the space provided. Please do not sign across the photograph.

The photograph should not be stapled or clipped to the form.

The form should be sent within 90 days from the allotment of the PRAN to CRA at the following address or else the PRAN will be frozen temporarily. The form should be sent to: Central Record Keeping Agency, NSDL e-Governance Infrastructure Limited, 1st Floor, Times Tower, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai – 400013

Other Relevant Points regarding opening of NPS Account

Only contribution in Tier 1 Account is considered for the purpose of Tax Deduction under Section 80CCD. Contribution in Tier 2 Account or Integrated Account is not considered for the purpose of claiming tax deductions.

NRI’s can also invest in NPS Account. NRI’s can invest either through the normal banking channels or through the funds held in their NRE/NRO/FCNR Account.

In case of any queries, you can mail to [email protected] or contact them at 022-40904242